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MGM to Buy Premium Cable Network Epix in $1 Billion Deal

Mini-major studio will purchase stakes currently held by Paramount and Lionsgate

Metro-Goldwyn-Mayer will become the sole owner of premium cable network Epix, after the mini-major studio bought out partners Paramount Pictures and Lionsgate, the company announced Wednesday.

MGM will pay $1.03 billion for the approximately 80.91 percent of the cable channel it did not own, valuing Epix at $1.25 billion in total, including $75 million distribution payments for each of the partners. The deal is subject to regulatory approval and is expected to close this month.

The deal gives MGM sole control of Epix’ four linear TV channels, which are available through traditional and digital distributors. Paramount and Lionsgate will also give Epix their first-run theatrical releases as part of multi-year agreements. Epix’s movie library has a combined gross of $4 billion, and the channel also airs original series such as the Golden Globe-nominated “Graves.”

“The addition of Epix provides MGM with a premier distribution platform that complements our strong stable of new and library content in both film and television.  The acquisition creates increased revenue diversity, new opportunities for growth, and earnings accretion for the benefit of stockholders,” Gary Barber, Chairman and CEO of MGM said in a statement.  “I would like to thank Jon Feltheimer and his colleagues at Lionsgate and Bob Bakish and his colleagues at Viacom and Paramount, for their unwavering commitment to building the value of this premium service, and their continued commitment to provide their theatrical releases for years to come. We also look forward to welcoming Mark Greenberg and his team to the MGM family.  With Mark’s strong leadership and dedicated management team, Epix’s innovative platform and premium film and television content, Epix is well positioned to capitalize on the evolving patterns of content consumption in a dynamic distribution landscape.”

“Together with our partners, we are proud to have built Epix into a strong, differentiated and valuable brand,” Viacom President and CEO Bob Bakish added in the statement. “As Viacom executes against its new strategy, we welcome the opportunity to strengthen our balance sheet by realizing the value of our equity investment, while also extending the successful commercial partnership between Epix and Paramount Pictures with a new multi-year output agreement.  MGM will be an outstanding steward of the network, and we look forward to working with Epix to bring its subscribers even more premium entertainment for years to come.” 

“With our partners at MGM and Viacom, we are proud to have built a technologically advanced, consumer-facing platform driven by great content,” Lionsgate Chief Executive Officer Jon Feltheimer said in the statement. “Though we are shifting our investment focus to our wholly-owned platforms, we wish CEO Mark Greenberg and the rest of the Epix team, along with Gary Barber and his colleagues at MGM, great success in continuing Epix’s strong growth in the future.”

“This agreement between our founding partners MGM, Lionsgate and Viacom reflects the significant value already created in this joint-venture, while acknowledging the accelerated growth potential of Epix with a single, focused and committed owner,” Mark Greenberg, Epix president and CEO, said in the statement. “We are proud to have built this very successful business and we want to thank our partners for their investment, strategic engagement and support since our founding. The Lionsgate and Viacom priorities have evolved in recent months, and now is the right time for them to capitalize on their initial investment and focus their attention on their other businesses, while they continue to provide Epix with great studio movies and original series for years to come.  As we look forward, we are excited about the future of Epix as a wholly-owned business of MGM. Gary Barber and the team at MGM have the resources, understanding and dedication to our near and long-term success that are essential in this rapidly evolving media and entertainment landscape where the power of great content is critically important.”

LionTree Advisors served as financial adviser to Viacom and Lionsgate.  Latham & Watkins LLP were MGM’s legal advisers, while Shearman & Sterling LLP served as legal advisers to Viacom and O’Melveny & Myers LLP served as legal advisers to Lionsgate.

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